2017 Investor Roundtable:General Discussion

[ValueAnalyst]

This I don't understand. Safer "drivers" and vehicles should benefit insurance companies by reducing payouts.

The ultimate goal of autonomous driving is not to decrease accidents; it is to eliminate them completely.

If there are no accidents, there is no need for insurance.

 

[TMSE]

This I don't understand. Safer "drivers" and vehicles should benefit insurance companies by reducing payouts.

Insurance premiums will shrink more

 

[ggr]

This I don't understand. Safer "drivers" and vehicles should benefit insurance companies by reducing payouts.

Most money is made by raking off a percentage of the money that flows through (that is, gross margin). Safer cars means smaller payouts and smaller insurance costs, so revenue down, and profit down.

 

[JRP3]

I expect as long as there are humans in and around vehicles there will be accidents of some sort, and the need for insurance.

 

[JRP3]

Most money is made by raking off a percentage of the money that flows through (that is, gross margin). Safer cars means smaller payouts and smaller insurance costs, so revenue down, and profit down.

Good point.

 

[Intl Professor]

This I don't understand. Safer "drivers" and vehicles should benefit insurance companies by reducing payouts.

True in the short run. In the long, there will be less business as competition for a shrinking pile and in the even longer run ownership is replaced by rental time.

 

[JRP3]

With all the FUD that comes up about resources, specifically Lithium and Cobalt, this video by Kurt Kelty on the GF addresses resource costs around the 20 minute mark. Discussion should be in the Resource Angle thread where I also posted it but I think it's important enough to be posted here where more eyes will see it. Bottom line, Lithium and Cobalt will not be an issue, and Nickel is actually the largest resource cost driver.

 

[dw4ngg]

The ultimate goal of autonomous driving is not to decrease accidents; it is to eliminate them completely.

If there are no accidents, there is no need for insurance.

I can assure you accidents will never be completely eliminated.

 

[racer26]

Yeah, but Tesla doesn't want Americans servicing their cars in Canada (seriously), and it's a pain to cross the lake.

Believe me I know what an annoyance the lake is when it comes to visiting upstate NY or vice versa. I've spent a good many hours of my life driving around Lake Ontario to get to the other side. I grew up in Oshawa, ON, and visited Rochester, NY (about 100km away as the crow flies, 330km by the existing road network) several times in my younger years.

Tesla doesn't want Americans servicing their cars in Canada? Is the reverse true? Or is it more that they want you to use the service centers assigned to your region for routine matters? If I travel with my newly acquired Model S across the US and have a problem, are they going to refuse to work on my Canadian car at a US service center? (Similarly, would an American Model S owner travelling in Canada be turned away from our service centers if they had a problem?)

Traffic adds the extra hour. :-(

Fair Enough

Population of Alberta: 4 million. Yeah, they need a Calgary or Edmonton SC.
Population of Saskatchewan: 1.13 million. Yeah, they need a Saskatoon SC *eventually*
Population of Manitoba: 1.28 million. Yeah, they need a Winnipeg SC *eventually*.
Population of upstate NY outside Westchester is higher than all three.

Calgary's is under construction right now, expected to open in late May. But yes, I agree, its insane for upstate NY to not have any service center. Either Buffalo or Syracuse needs one pronto, and the other not far behind.

Toronto area has recently gone from 1 to 3, with Oakville and Mississauga coming online recently in addition to Toronto-Lawrence where my car is currently getting its due bill items dealt with.

Anywhere which is serving 4 million people is not low enough density for that. Even if only half of them have cars (unlikely in a low density area) and even if Tesla only has 5% of the market, this is 100,000 customers, each of whom will need to be seen at least once a year for annual service, or 273 customers per day.

Even if Tesla has 0.625% of the market (which is 500K / 80 million world car sales), this is 34 customers per day. Assuming 7-day-a-week operations.

It's worth actually looking at the numbers here. A service center in places like Syracuse (or Calgary) is absolutely required if Tesla plans to sell cars in these areas in the long term, which I assume they do. These are NOT low-density areas. Wyoming is a low-density area.

Tesla doesn't currently have even 0.5% of the market, though. I could see a handful of mobile service reps being able to handle S/X owners in an area of 2-3M people. It all gets broken right quick when you throw the 3 into the mix. Then you're right, it only works in especially low-density areas.

 

[CatB]

Most money is made by raking off a percentage of the money that flows through (that is, gross margin). Safer cars means smaller payouts and smaller insurance costs, so revenue down, and profit down.

But still, it's a competitive environment. Smarter insurance companies that adjust their actuarial models to give autonomous cars discounts first will take more market share from their competitors.

 

[MitchJi]

With all the FUD that comes up about resources, specifically Lithium and Cobalt, this video by Kurt Kelty on the GF addresses resource costs around the 20 minute mark. Discussion should be in the Resource Angle thread where I also posted it but I think it's important enough to be posted here where more eyes will see it. Bottom line, Lithium and Cobalt will not be an issue, and Nickel is actually the largest resource cost driver.

Excellent video! Highly recommended!

 

[MikeC]

Warren Buffett regretting he missed GOOG, AMZN at his 2017 investor meeting. I wonder at which year's meeting he will be admitting he missed TSLA.

Buffett Says His IBM Thesis Was Flawed, He Blew It on Google

 

[hobbes]

From AP thread:

I posted some of my initial driving impressions in the MX 17.17.4 thread, but I'll summarize: it really feels like AP1 and then some. Tracks curves around hills quite well. Much smoother and less hesitation overall...

I was really having a bad feeling about AP 2 progress, but it seems to arrive at parity with AP 1 now. Looking forward to videos...

 

[hobbes]

Warren Buffett regretting he missed GOOG, AMZN at his 2017 investor meeting. I wonder at which year's meeting he will be admitting he missed TSLA.

Buffett Says His IBM Thesis Was Flawed, He Blew It on Google

Still time to buy !

 

[MitchJi]

that's a great point! And it's another reason why, say a 50% rise in the coming weeks, shouldn't be reason to sell all shares.

If there's a squeeze and it's possible to time it there's definitely a good reason to sell and repurchase on the dip!

Question1: if there were M3 production delays, would Tesla let us know in advance? Or would we find out after the fact?

Question2: if there were issues where Tesla would likely only deliver 20-40k Model 3s this year but still could reach 5k/week run rate in last week of December, would Tesla tell us of those issues?

Question3: is it possible that Tesla already knows they can't deliver 100k M3 cars in 2017? Thus, they're avoiding delivery guidance for 2017 and focusing on run rate goal by end of year, which likely means last week of December?

1. I don't believe that they will announce it, but if they are asked directly, on an ER call or at the shareholders meeting they won't lie.

2. I don't think so. I hope not (for buying short or medium term options that would be a killer.)
NOTE:
I believe that it's Tesla's responsibility to do their best to fulfill their mission statement. I disagree with the belief that it's their responsibility to put the concerns of short and medium term option holders above the mission statement .

3. I believe it's currently the opposite. Elon said 100-200k by EOY, and nobody believed that. I believe they are not stating that now because they saw that as a problem. Also on the call Elon said that the M3 production line is designed for 100k per year. So I believe that they are sandbagging, but that has the added benefit of a win feeling like a win. So if/when Tesla knows that I don't think they will say anything.

But I'm biased because if they don't hit 10jk per week I owe @dennis some chocolate.

The bad part is that he has some false scarcity of dock space to deliver material. Too much friction for the return on the logistical investment, just to keep the number of loading docks down. The factory needs to breathe. There should almost be a dedicated dock for each part. Over provision loading docks. The factory should look like an IC.

I don't think they plan on a MY production line in Fremont.

Also useless for areas remote from the nearest service center, as you know.

Tesla can't afford to send mobile service rangers 5 hours up and 5 hours down on a regular basis. They're paying for 10 hours of driving for a skilled employee for each repair. I have no idea how much money they're losing servicing my car, but I could estimate it. I know they promptly cancelled the program under which I get this service for free

I agree that they need better geographic coverage with their sc's. But I also believe that they could use rangers more flexibly than you are saying. They could easily have home based rangers, or a based from a smaller non service facility.

 

[sundaymorning]

Warren Buffett regretting he missed GOOG, AMZN at his 2017 investor meeting. I wonder at which year's meeting he will be admitting he missed TSLA.

Buffett Says His IBM Thesis Was Flawed, He Blew It on Google

Is he even a technology person?

 

[MitchJi]

Bonnie's tweets:
Rain, fog, pooled water, semis, dark night ... AP2.0 for 230+ miles - it could see the road far better under the conditions. @elonmusk

And:
I kept my hands resting on the wheel - used AP2 for lane changing, too. Super bad conditions, was glad to have the assist tbh.

Sounds like Elon is correct (not a surprise!) when he said that cameras and vision are all that you need for AP.

When the word gets out this should be good for a nice SP bump.

 

[neroden]

Believe me I know what an annoyance the lake is when it comes to visiting upstate NY or vice versa. I've spent a good many hours of my life driving around Lake Ontario to get to the other side. I grew up in Oshawa, ON, and visited Rochester, NY (about 100km away as the crow flies, 330km by the existing road network) several times in my younger years.

Tesla doesn't want Americans servicing their cars in Canada? Is the reverse true?

Yep. I think it must be an accounting thing? Not wanting to do the currency conversions? Or maybe there are parts differences? I don't know.

Or is it more that they want you to use the service centers assigned to your region for routine matters? If I travel with my newly acquired Model S across the US and have a problem, are they going to refuse to work on my Canadian car at a US service center? (Similarly, would an American Model S owner travelling in Canada be turned away from our service centers if they had a problem?

They'll do it for emergencies.

Calgary's is under construction right now, expected to open in late May. But yes, I agree, its insane for upstate NY to not have any service center. Either Buffalo or Syracuse needs one pronto, and the other not far behind.

I could see a handful of mobile service reps being able to handle S/X owners in an area of 2-3M people. It all gets broken right quick when you throw the 3 into the mix. Then you're right, it only works in especially low-density areas.

Yeah, that's what I'm talking about. Model 3 is coming out in two months! It takes (much!) longer than that to set up a service center just in terms of paperwork, land acquisition, and hiring. I've been patient because I figured they could get away without a local service center until Model 3 came out. Which is basically *now* and they still haven't built a service center. Now is when it's becoming a problem for the company.

 

[DragonWatch]

Vs 20M Corollas, 10M Camrys and about 500M cars sold in that time.

Model 3 does not need the guy spending $18K on a Corolla to do a TCO analysis and buy the Tesla to be wildly successful.

Low lying fruit first is ok. 3 Series,C Class,Audi A4, Camry V6, Accord V6 conquest buyers is ok for the first couple of years.

Forgot Prius! Those guys/gals like me will jump to Tesla.

 

[SPadival]

I would rather not have Warren Buffett investing in TSLA. After watching this NatGeo episode, it is pretty clear that he does not believe in the TSLA mission statement.